Financing the Family Vacation
With Memorial Day coming up, summer and the travel season are officially kicking off. Everyone is planning to get out of town and have some fun in the sun. Family vacations are all about bonding and having fun, but unlike when a group of friends travel together and split the costs, it's usually Mom and Dad who foot the bill. Planning how to finance your vacation ahead of time can eliminate the stress of coming home to sizable credit card bills or a depleted bank account. Making the financial planning process a family affair may also teach your kids the rewards of saving money. Keep these four tips in mind when you’re planning your next family getaway.
Decide on a Budget-Friendly Destination
Planning a family vacation starts with deciding on a destination that fits your budget. Take advantage of package rates, if possible. For example, Disneyland family packages can include your hotel stay, park entry tickets, early admission and the possibility of upgrades. Air and ground transportation may also be included in some packages. Pricing a vacation package from one source gives you a more realistic expectation of the total price of your trip, excluding spending money.
Set a Realistic Savings Target Date and Amount
When you have a tentative price for that vacation, figure out how long it will take to save the amount you'll need. For example, if a four-night stay in Disneyland will cost roughly $2,000 for a family of four, and the trip is six months away, you'll need to save about $350 a month to pay for the trip.
Saving $400 a month would be even better because it gives you a cushion for unexpected expenses. If this seems unrealistic, change your target date or plan on staying at one of the less expensive hotels nearby to your destination instead of one inside the resort.
After you've budgeted a realistic monthly amount, it's time to start saving. You may have to prebook and prepay for the trip, but the money you save can be used to pay off the credit card bill before you leave.
Open a Second Savings Account
Chances are, you already have a checking and savings account. Opening a second savings account dedicated to your family vacation not only helps keep your savings target on track, but it prevents you from easily pulling additional funds from your emergency nest egg. You know it's safe to spend whatever cash is in that second account because those funds have been budgeted for vacation. Periodically sharing the progress of that second account with the family can help curb unnecessary spending.
Get the Kids Involved in Saving
If your children are old enough to earn an allowance, they're old enough to understand the concept of saving toward a goal. This is another place where that second savings account can come in handy. Sit down with the family early in the vacation planning progress and discuss how much money that vacation will cost. Set up a savings jar so everyone can throw in excess change, which will go into the vacation savings account. As the account's balance grows, your kids will see that they're helping to make their vacation a reality.